By LEVI PULKKINEN, SEATTLEPI.COM STAFF

Published 10:00 pm, Monday, September 27, 2010

Federal agents have raided the Bellevue office and "Mediterranean-style villa" of Kirkland developer suspected in a mortgage fraud scheme, according to documents filed in U.S. District Court.

In search warrants unsealed earlier this month, investigators with the Puget Sound Mortgage Fraud Task Force assert developer Wade M. Entezar, his wife and an associate falsified loan applications as a part of a "builder bailout" scam aimed at driving up home prices in a housing development built by Entezar's firm.

To do so, officers with the companies took advantage of loans offered by various banks in which the borrower's income was not independently verified. Baydovskiy and others obtained at dozens of such loans -- referred to as "liar's loans" in the industry, according to court documents -- simply by grossly overstating clients' incomes on mortgage applications.

According to court documents, those involved used the affiliated businesses as fronts to take out exorbitant loans of behalf of so-called "straw buyers." They augmented the good credit of those buyers with falsified income documents to obtain the loans, which they then siphoned money off of before attempting to resell the homes.

Federal agents seized 1,500 escrow files during the investigation into Kobay and Nationwide. Investigators now contend several of those fraudulently obtained loans were brokered on the Entezars' behalf.

Writing the court in support of search warrants since served on the Entezars' Kirkland home and Bellevue office, Stephenson argued Wade Entezar used Baydovskiy's companies to obtain loans for homes built in a Quincy development constructed by Entezar and Van der Merwe.

The loans were issued to associates of Entezar and Van der Merwe, the postal inspector continued, alleging that Baydovskiy assists the developers in making it appear as though down payments had been made on the homes. Their aim, Stephenson told the court, was to set prices high on the first homes sold at the development so that additional funds from construction loans would be forthcoming. The homes were expected to be sold at $450,000; during the years in question, 2005 to 2008, houses in the Quincy area were selling on average for $107,000 to $170,000.

"Potential buyers were told by Entezar and Van der Merwe that Microsoft and other high tech companies were planning on building new facilities in the area and that these homes would be in demand by high-income employees relocating to Quincy to work," Stephenson said in court documents.

"However, the real estate market softened and it was learned that Microsoft and other companies had cancelled plans to build new facilities in Quincy."

Only 10 of the 132 homes were purchased, according to the search warrant statement. Half of those sold are alleged to have been bought by associates of Wade Entezar, Baydovskiy and Van der Merwe. According to the search warrant, four of those homes have either been foreclosed or been placed on the market for months.

The development was ultimately sold to another developer, who was told the homes were sold near the $485,000 list price. According to the search warrant statement, a consultant hired by the man reported that several of those who'd bought homes had been promised they would not have to pay their mortgages and that Van der Merwe and Entezar had let the loans slip.

Investigators also assert that the Entezars falsified income information to acquire home loans for themselves in order to purchase a $4.4 million home in Kirkland. To do so, Stephenson asserted, Wade Entezar helped falsify a loan application claiming his wife, a homemaker, ran a computer company at which she was earning up to $58,860 a month.

No charges have been filed in the case. Attempts to reach a representative at Wade Entezar's Bellevue office were unsuccessful.